beejaykc aka Munch A Bunch Posted January 3, 2014 Share Posted January 3, 2014 Anybody using the invoice/statement features in quickbooks to deliver commission statements to your customers? I'd love to see how you do that if you can share (PM me if you prefer). Currently, I spreadsheet it. I made it fancy with drop down, etc. Then I convert the spreadsheet to a PDF. Looks nice, and works.....but it is an extra step. I currently don't have any of my location information in QB. I only have my vendors. Thanks! Link to comment Share on other sites More sharing options...
AZVendor Posted January 4, 2014 Share Posted January 4, 2014 You will find it difficult to use QB for this if you aren't using it for tracking your income too. QB uses typical accounting principles via credits and debits, though they are disguised as checks and receipts so small business owners without accounting training can understand some simple accounting. Without recording income your QB won't have money to pay to anyone. If you do record your vending income in QB in some form, then in order to pay commissions you will have to set those customers up as vendors because only vendors (well, employees too, but that is another can of worms) can get paid. If you pay money to an normal income customer, that payment is recorded as a credit or refund, which will really bork up your accounting. You may find it much easier to use your spreadsheet converted to a PDF. So do you record the payment due the location based on the PDF as an expense payment? Is it recorded in QB as paid to a vendor? You may already be doing all that QB can handle. The statements feature in QB, by the way, is on the receivables side of the books. Link to comment Share on other sites More sharing options...
beejaykc aka Munch A Bunch Posted January 4, 2014 Author Share Posted January 4, 2014 Yeah. I record commissions as an expense called "commissions". My accountant said that if the location isn't paying sales tax on that......which 99% of the time they won't......I need to pay the tax on that, and treat commissions as an expense. When I started back in March, I used to display total gross and net revenues per machine to my customers. I displayed what my costs were (easy spreadsheet formula because I generally know my margins), then had a Net column. I did this because my agreements for commissions pay on Net, not Gross. The bottom line is that I no longer display margins and gross. I still list individual machine sales, but show that number as the Net number on the statements. Using my spreadsheet seems easier than making QB work. I'll do that. Thanks!! Link to comment Share on other sites More sharing options...
AZVendor Posted January 4, 2014 Share Posted January 4, 2014 I don't understand why anyone would pay sales tax on a commission from vending sales. I have never heard of that before and I hope your accountant isn't leading you astray. Depending on your state department of revenue rules you could be required to pay sales tax on your vending sales but the portion of sales then paid as a commission, whether a percentage of gross or net or a set or sliding fee scale, should not be taxable to you as you would have already been taxed for the retail sales. The commission paid is simply an expense item that the location would have to record as income on their own tax returns, but it would not be income on your own return. I know for a fact that many accountants do not understand the vending business and the relationship between vendor sales and payments to the clients. It sounds like your accountant may be one of those. I think you need to revisit this with your accountant or seek other opinions to confirm this. Link to comment Share on other sites More sharing options...
beejaykc aka Munch A Bunch Posted January 4, 2014 Author Share Posted January 4, 2014 Got ya. It should be the locations responsibility to pay tax on the revenue I'm giving them. I shouldn't assume they're not. Therefore I shouldn't pay tax on the money I give them as commission. Revenue - costs - commissions = Net revenue. THIS is the number I should be paying sales tax on. Link to comment Share on other sites More sharing options...
AZVendor Posted January 4, 2014 Share Posted January 4, 2014 You are almost correct. Unless things are different in your state, if you pay sales tax on taxable items you sell in your vending machine, then the sales tax is paid on the sales price, not your net profit. So you pay sales tax on gross sales, just as you would when buying something in a store, then you deduct your expenses to get to your net profit. Don't confuse sales tax you pay for each sale to income tax paid on your business net profit. Link to comment Share on other sites More sharing options...
beejaykc aka Munch A Bunch Posted January 4, 2014 Author Share Posted January 4, 2014 AZ - sorry for the confusion. I was specifically talking about remitting sales tax to the state. I don't pay sales tax on my purchases (Vistar/Sam's), so I do need to submit it on sales made from the equipment. So when I started, I took total sales, minus commissions, minus cost of goods sold and submitted the appropriate percentage to the state. Then.....my accountant indicated that I should do total sales minus cost of goods sold and submit the appropriate percentage. And quite frankly, that's easier than going back and subtracting commissions. From a cash flow perspective, it would be nice to do the work and subtract commissions. This will reduce my sales tax amount and will help me from a cash on hand perspective. Either way, it's not a large number. My commissions are friendly. I'm going to rethink how I do this. I shouldn't take the location's ability/willingness to submit sales tax on the commissions I pay. That's their problem, not mine. Sorry to hijack this discussion topic. Wasn't supposed to go this way. LOL Link to comment Share on other sites More sharing options...
AZVendor Posted January 4, 2014 Share Posted January 4, 2014 Just a quick Google search shows these Missouri websites that you need to be familiar with http://dor.mo.gov/business/sales/ and this sub-page for exemptions http://dor.mo.gov/business/sales/sales-use-exemptions.php . If you scroll down this exemptions page to 1988 and HB1400 there is a link to the verbiage for it: http://www.moga.mo.gov/statutes/C100-199/1440000012.HTM . I encourage you to be very familiar with how your state and your city/county might tax your vending sales. I got caught up in a scheme by one city to "reinterpret" the state tax code and they fined me $14000 for unpaid vending sales tax many years ago. The "reinterpretation" was overturned, but not before I had to pay the taxes and fines. Link to comment Share on other sites More sharing options...
Walta Posted January 5, 2014 Share Posted January 5, 2014 Please be very careful taking tax and legal advice from the internet is very dangerous. The people giving the advice may have good intentions, expert knowledge, local knowledge current knowledge or they may not. If your advice is wrong and you fail to pay all the correct taxes the fine and penalties can be huge. I live in Missouri we have special sales tax rules for vendor. Money pay to a tax pro to explain them to you would be well spent. It sounds like the location is trying to bamboozle you to the point that they need not pay any tax on the money you pay them. I think most vendors in Missouri pay sales tax on their gross revenues should send 1099 to any location receiving over 600.00 in commissions. Also all commissions should be paid by check. If anyone insists on cash be sure both of you sign a receipt with the cash clearly listed. Walta Link to comment Share on other sites More sharing options...
beejaykc aka Munch A Bunch Posted January 5, 2014 Author Share Posted January 5, 2014 All good points, Walta! Link to comment Share on other sites More sharing options...
dogcow Posted January 5, 2014 Share Posted January 5, 2014 As walta says do ur own research but maybe I can clear this up. In florida vending comissions is considered a lease of property by the owner and subject to sales and use tax. There is a provision of the law that allows the vending operator to remit these taxes on behalf of the location and most big locs like bowling ctr or movie theaters want it as part of the deal that the vendor handles this tax I can post more info if ur interested Sent from my T-Mobile myTouch Q using Tapatalk 2 Link to comment Share on other sites More sharing options...
AZVendor Posted January 5, 2014 Share Posted January 5, 2014 Boy, Arizona is sure a much better place to do vending. There are no taxes on commissions and we even have a sales tax deduction called "food for home consumption" that is similar to the cities that don't charge sales tax in grocery stores. This deduction can be used where the machines are in a location that the customer is presumed to be taking the food/soda with them to their home. This works where there is no provision for the products to be consumed on the premises, such as an apartment complex or a public location. Link to comment Share on other sites More sharing options...
musser Posted January 5, 2014 Share Posted January 5, 2014 Walta is spot on. Consult a tax pro (cpa). Every state has unique tax reqirements only a local tax pro can adequately explain them to you. Generally for Missouri, again I agree with Walta, you pay sales tax on gross sales, and some juristictions may have different rates. The Commissions you pay have nothing to do with your sales tax. Commissions are "rent" to your locations and they must include this income on thier income taxes. Now Missouri may have some special tax on that other than income but they are not your responsibility. Also as far as reporting commissions paid out you must issue a 1099 to a location if the annual amount is over $600, BUT if the location is a corporation that provision does not apply. Did I mention talking to a tax pro? Link to comment Share on other sites More sharing options...
JerryTaylor Posted January 4, 2015 Share Posted January 4, 2015 I live in Missouri to. Yes I would recommend going to a tax pro (CPA). Paying fines could be devastation for a business. Link to comment Share on other sites More sharing options...
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